DBRS Morningstar: U.S. Banks 4Q21: Profitability Metrics Approach Normalized Levels on Lower Reserve Releases

NEW YORK–(BUSINESS WIRE)–#Credit–DBRS Morningstar has released a new commentary reviewing fourth-quarter results for U.S. banks.

Key highlights include:

  • With even less of a benefit from loan loss reserve releases, profitability metrics at U.S. banks generally reverted to pre-pandemic levels.
  • Given the likelihood of higher interest rates in 2022, greater loan demand and lagging deposit repricing, we expect further improvement in net interest income to largely offset normalizing fee income trends, particularly in capital markets-related revenue, asset management and mortgage banking.
  • Importantly for creditors, capital and liquidity levels remain extremely strong and asset quality metrics were stable to improved, despite already being at, or near, record-setting lows.

“While our baseline 2022 economic scenario for U.S. GDP has been revised downward to 3.9% reflecting the adverse impact to growth from supply chain shortages and rising inflationary pressures that have raised expectations of interest rate hikes, we view this level of economic growth as supportive to bank ratings,” said Michael McTamney, Senior Vice President – Global FIG.

To read the full report, click here: https://www.dbrsmorningstar.com/research/391253/us-banks-4q21-profitability-metrics-approach-normalized-levels-on-lower-reserve-releases

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